: 2011 Ontario Budget: Glossary


Note: The descriptions of the terms in the glossary are solely intended for the assistance of readers of the 2011 Budget. The glossary and the descriptions of the terms in the glossary are not intended to affect or alter the meaning of any terms under law.

Accounting Period: the time covered by financial statements, which can be for any length of time but is usually a fiscal year (April to March for the Province), a quarter or a month.

Accumulated Deficit: the difference between liabilities and assets. It represents the total of all past annual deficits and surpluses, including prior-period adjustments.

Actuarial Valuation Report: a valuation of the assets and liabilities of a pension plan that determines the funded status of the plan and the amount of contributions required to be set aside annually to fund the benefits provided by the plan. Values are calculated using accepted actuarial practice. The Pension Benefits Act requires all defined benefit pension plans to file an actuarial valuation report with the Superintendent of Financial Services at least once every three years. Plans with solvency concerns must file an actuarial valuation report annually.

Amortize: to allocate costs or revenues to different accounting periods such as over the estimated useful life of an asset.

Appropriation: authority to pay money out of the Consolidated Revenue Fund or to recognize a non-cash expense or a non-cash investment.

Assistance for Children with Severe Disabilities (ACSD): a social assistance program that provides a monthly payment to parents to help with the extra costs related to their child’s severe disability. The ACSD is paid to low- to moderate-income families.

Broader Public Sector (BPS): organizations receiving government transfer payments to provide services to the public. Such organizations include universities, colleges, school boards, hospitals, long-term care facilities, community care access centres and children’s aid societies.

Business Inputs: current and capital expenditures that businesses acquire to run their operations and to provide goods and services, such as vehicles and fuel, building materials, computers, office furniture and equipment, and telecommunication services.

Canada Health Transfer (CHT): a federal transfer provided to each province and territory in support of health care.

Canada Pension Plan (CPP): a mandatory, publicly administered, defined benefit pension plan that provides a basic level of earnings replacement for all workers in all provinces and territories, other than Quebec. The CPP is funded by employer and employee contributions and investment earnings.

Canada Social Transfer (CST): a federal transfer provided to each province and territory in support of postsecondary education, social assistance and social services, including child care.

Capital Cost Allowance: the portion of the capital cost of an asset (e.g., a building, automobile or machine) that may be deducted for income tax purposes each year.

Capital Expenditure: an expenditure to acquire, construct or upgrade physical assets including transportation infrastructure, land and buildings, information technology infrastructure and systems, vehicles, marine fleet and aircraft.

Capital Gain: the net profit arising from the sale or transfer of capital assets or investments; i.e., the proceeds or market value received less the net book value of the capital asset or investment.

Capital Tax: a tax levied on a corporation’s taxable capital comprising capital stock, surpluses, indebtedness and reserves.

Cash and Cash Equivalents: cash or other short-term, liquid, low-risk instruments that are readily convertible to cash, typically within three months or less.

Classified Agencies: Provincial government entities that are not part of a ministry, but are accountable to ministers for fulfilling their legislative obligations, managing their resources and providing a wide range of public services to Ontarians.

Comfort Allowance: a monthly benefit provided to low-income seniors in long-term care facilities whose seniors’ benefits are less than the cost of their care. The Comfort Allowance is intended to meet personal, out-of-pocket budgetary needs.

Consolidated Organization: a government-controlled organization such as an agency, hospital or school board whose financial results are included in the Province’s financial statements.

Consumer Price Index (CPI): a measure calculated each month of the cost of a basket of over 600 goods and services typically purchased by Canadian consumers. The CPI compares, in percentage terms, prices in any given time period to prices in the base period, which is currently 2002=100.

Contingency Fund: an amount of unallocated expense authority used for planning available to address unanticipated spending pressures; for example, disaster assistance.

Debt Maturities: the total forecast amount of debt due for repayment on specific dates.

Debt Redemptions: the amount of bonds expected to be redeemed before maturity. Debt redemptions primarily relate to Ontario Savings Bonds.

Debt-to-GDP Ratio: a measurement of the government’s debt as a percentage of gross domestic product (GDP). It is a measure of the debt in relation to the economy and its capacity to carry and repay debt.

Deficit: a negative fiscal balance.

Derivatives: financial contracts that derive their value from other underlying instruments, such as bonds. The Province uses derivatives including swaps, forward foreign exchange contracts, forward rate agreements, futures and options to reduce the risks associated with issuing bonds in different currencies and minimize interest costs.

Employment Insurance (EI): a federal program that provides temporary earnings replacement for unemployed workers notionally funded by premium contributions from workers and employers. The EI program also provides maternity, parental, adoption, sickness, compassionate care, work-sharing and fishing benefits. Employment Insurance also funds training programs and income support while training through Labour Market Development Agreements with each province and territory.

Employment Ontario: the Province’s integrated employment and training network providing programs such as apprenticeship, literacy, technical training, wage subsidies, summer jobs, laid-off worker assistance and employment counselling in communities across the province.

Equalization: a federal government program that provides unconditional transfer payments to provinces whose revenue-raising capacity falls below a federally determined standard.

Euro Medium-Term Notes (EMTNs): debt issued outside the United States and Canada and structured to meet individual investor requirements. These notes are issued for terms ranging from two to 12 years.

Financial Assets: assets that could be used to discharge existing liabilities or finance future operations and are not for use in the normal course of operations. Financial assets include cash; an asset that is convertible to cash; a contractual right to receive cash or another financial asset from another party; a temporary or portfolio investment; a financial claim on an outside organization or individual; and inventory.

Fiscal Balance: total revenue minus total expense and the reserve.

Fiscal Consolidation: a policy aimed at reducing government deficits and debt accumulation.

Fiscal Plan: an outline of the government’s revenue and expense projections for a given year.

Fiscal Year: the time period used for budgeting and financial reporting. The Province of Ontario’s fiscal year runs from April 1 to March 31.

Floating Rate Notes: debt instruments with a variable rate of interest.

Global Bonds: debt securities issued simultaneously in the international and domestic markets, settling through various worldwide clearing systems. These bonds can be issued in a variety of currencies, including Canadian and U.S. dollars.

Gross Domestic Product (GDP): the total unduplicated value of the goods and services produced in the economy of a country or region during a given period of time such as a quarter or a year. Gross domestic product can be measured three ways: as total income earned in current production, as total final expenditures, or as total net value added in current production. See Real GDP.

Input Tax Credit (ITC): a credit of the Harmonized Sales Tax (HST) that Goods and Services Tax/HST registrants can claim to recover the tax they paid or owe on goods or services they acquired to provide taxable goods and services.

Interest on Debt Expense: the cost of borrowing money, excluding any amount of interest capitalized during the construction of capital assets.

Investment in Capital Assets: the cost of acquiring, constructing or upgrading tangible capital assets owned by the Province and its consolidated organizations during the year, including land, buildings, highways and bridges, information technology infrastructure and systems, vehicles, marine fleet and aircraft.

Knowledge-Based Industries: industries that are relatively intensive in their inputs of research and development, advanced technology and highly skilled human capital. According to the Organisation for Economic Co-operation and Development, these industries include "high-technology" manufacturing (e.g., aerospace, electronic equipment) and knowledge-intensive services (e.g., information and culture, financial services) in the market economy.

Labour Market Agreement (LMA): the Canada-Ontario Labour Market Agreement, signed in February 2008, provides funding for six years to Ontario for training and employment services for unemployed non-EI-eligible Ontarians and employed low-skilled workers.

Labour Market Development Agreement (LMDA): the Canada-Ontario Labour Market Development Agreement, signed in November 2005, provides funding to Ontario annually from the Employment Insurance Act — Part II (Employment Benefits and Support Measures) to address Ontario’s labour-market priorities. Funding supports training and employment services.

Marginal Effective Tax Rate (METR): the tax rate that applies to an incremental dollar of income from new capital investment. It takes into account federal and provincial/state corporate income taxes, capital taxes and sales taxes.

Net Debt: the difference between total liabilities and financial assets.

Net Loans/Investments: the total amount of loans and investments made by the Province minus loan repayments received.

Nominal: an amount expressed in dollar terms without adjusting for changes in prices (inflation or deflation).

Non-Cash Adjustments: adjustments required to determine the cash flows from operations and capital expenditures. Non-cash adjustments include changes in balances of accounts receivable; accounts payable; accrued pension and construction liabilities; and investments in government business enterprises. Amortization and imputed interest during construction on capital assets are also non-cash adjustments.

Non-Cash Expense: expense incurred during the period for which there is no cash outflow. The related cash outflow occurred in a prior period, will occur in a future period or has been offset against a potential cash inflow.

Non-Tax Revenue (NTR): all revenues reported by the Province in its financial statements other than revenues from taxation. The three main categories of NTR are (i) Government of Canada transfer payments, such as Canada Health Transfers and Canada Social Transfers; (ii) Income from Government Business Enterprises, such as Ontario Power Generation Inc. and the Liquor Control Board of Ontario; and (iii) various Other Non-Tax Revenues, such as vehicle and driver registration fees, revenues from the sale of goods and services, and reimbursements of provincial expenditures in delivering certain services and royalties for use of Crown resources.

Ontario Child Benefit (OCB): an income-tested, non-taxable monthly benefit that is provided to low- to moderate-income families with children under age 18. The OCB consolidates social assistance benefits for children and the Ontario Child Care Supplement for Working Families into one benefit that is paid to all low- to moderate-income families with children, regardless of the source of their income.

Ontario Child Care Supplement for Working Families (OCCS): an income-tested, non-taxable monthly benefit that is provided to low- to moderate-income working families with children under age seven. In July 2008, OCCS payments were consolidated with the OCB. The OCCS stopped taking new children as of July 2009. Children born before July 1, 2009 and under the age of seven remain eligible to receive the OCCS.

Ontario Disability Support Program (ODSP): a program that provides income and employment assistance to people with substantial disabilities. Ontarians aged 65 years or older who are ineligible for Old Age Security may also qualify for ODSP if they are in financial need.

Ontario Savings Bonds (OSBs): an investment that is backed 100 per cent by the Province of Ontario, including both principal and interest. They are available to retail and institutional investors through financial institutions, credit unions, caisses populaires and investment dealers.

Ontario Works: a program that provides income and employment assistance to eligible Ontarians in need. All Ontario Works recipients are required to participate in one or more employment assistance activities as a condition of eligibility for financial assistance. This helps people become self-reliant as quickly as possible.

Pension Benefits Guarantee Fund (PBGF): established in 1980, the PBGF provides a top-up that ensures the first $1,000 per month of member and retiree pensions is paid in full when a defined benefit pension plan winds up in circumstances where the employer sponsor becomes insolvent and the pension plan has insufficient assets to pay the benefits provided under the plan. Sponsors of plans covered by the PBGF are required to pay annual assessments to the Fund. The Fund is administered, and the assets invested, by the Superintendent of Financial Services. If the assets of the Fund are insufficient to pay claims, the Pension Benefits Act allows the Province to make loans or grant money to the PBGF.

Procurement: the process of acquiring goods and services.

Productivity Growth: the increase in output per unit of a factor of production.

Program Expense: the expense related to operating and capital programs including amortization. Excludes Interest on Debt expense.

Public Accounts: the Annual Report and Consolidated Financial Statements of the Province along with supporting statements and schedules as required by the Financial Administration Act.

Public Infrastructure: the facilities, systems and equipment required to provide public services and support private-sector economic activity, including network infrastructure (e.g., roads, bridges, water and wastewater systems, large information technology systems), buildings (e.g., hospitals, schools, courts), and machinery and equipment (e.g., medical equipment, research equipment).

Real GDP: gross domestic product (GDP) measured to exclude the impact of changing prices.

Real Return Bonds (RRBs): debt securities that pay investors a rate of return that is adjusted for inflation using the Consumer Price Index (CPI).

Reserve: an amount included in the fiscal plan to protect the plan against adverse changes in the economic outlook, Provincial revenue or Provincial expense.

Retail Sales Tax (RST): the sales tax imposed under the Retail Sales Tax Act. The broad-based tax provisions of the Retail Sales Tax Act have been wound down as part of the move to the Harmonized Sales Tax, with the exception of certain provincially levied taxes such as the sales tax on specified insurance premiums and private transfers of used vehicles.

Special Purpose Fund: a fiscal and accounting entity segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations.

Surplus: a positive fiscal balance.

Surtax: a tax levied on another tax, or a second tax levied on an amount that is already subject to tax.

Syndicated Bond Issues: debt securities that are underwritten by a group of investment dealers.

Tangible Capital Assets: physical assets including land, buildings, transportation infrastructure, vehicles, leased assets, machinery, furniture, equipment, information technology infrastructure and systems, and construction in progress.

Temporary Care Assistance (TCA): a social assistance program that provides a monthly payment to an adult who is looking after a child in financial need of whom he or she is not the natural or adoptive parent.

Total Debt: the Province’s total borrowings outstanding.

Total Expense: the sum of program expense and interest on debt expense.

Treasury Bills: short-term debt instruments issued by governments on a discount basis.

U.S. Commercial Paper: short-term debt typically issued in the United States by a government or corporation on a discount basis. U.S. Commercial Paper is limited to terms of one to 270 days.

Value-Added Tax: a multi-stage tax on consumption that applies throughout the supply chain regardless of whether the purchase is for use by a business or consumer, but that allows most businesses to be reimbursed for the tax paid on their business inputs through the use of input tax credits.

Weighted-Average Interest Rate: the average cost of debt, taking into account the amount of debt at each rate of interest.

Working Capital: the difference between current assets and current liabilities. It is the financial liquidity that is available to support current operations and represents cash and other assets that can readily be converted into cash in the short term, less indebtedness payable on demand and other liabilities payable in the short term.

Yield: the effective rate of interest paid on an investment. Yield is the annual rate of return on any investment or debt and is expressed as a percentage.